ALSCON is bankrupt, says KPMG

The Aluminum Smelter Company of Nigeria (ALSCON) is bankrupt, an audit by KPMG has revealed.

Details of the report made available to The Nation put the value of ALSCON as at December 31, 2011 at $89.9 million, whereas the company has accumulated a debt in excess of $135 million, or N22 billion.

According to the report, entitled: Aluminum Smelter Company of Nigeria Plc Financial Statements – December 31, 2011 together with directors’ and auditor’s reports, under current liabilities, said ALSCON received a short term loan of N21.348billion in 2011.

The report noted that the short term loans of N18,173,266,000 were given to DAYSON Holdings Limited;RUAL Limited N2,719,758,000 and SEA CHAIKA Corporation, N455,323,000, totalling N21,348,347,000.

According to the report, “the loan agreements provide that the loans shall bear no interest, except where the company fails to fully repay the loan at the maturity date, in which case the company would be obliged to pay interest on the outstanding amount of the loan at the rate of two per cent per annul.”

It further revealed that the movement in the loan balances during the year showed that N17.513billion was the balance at the beginning of the year, while N3.042billion was the amount of loan drawn down during the year. There was no repayment of the loan during the year and there was an exchange difference of N792,348,347,000, totalling N21,348,347,000.

The President of BFIGroup, Dr. Reuben Jaja, confirmed that ALSCON was, indeed, bankrupt. He said BFIG had also seen the audit and the N21.3 billion short term loan that was in the books of the company.

Dr. Jaja said BFIG will invite the Economic and Financial Crimes Commission (EFCC) to investigate what led to the insolvency of ALSCON, and what the money was used for. He wondered what the loan could have been used for since there were neither machinery upgrades, nor acquisition of new machines.

He lamented that ALSCON has only N94.5 million as cash in the bank and at hand as at the time of the audit. Jaja said he was worried that the condition of the company might be worse, two years after the audit.

He expressed dismay that the Bureau of Public Enterprises (BPE), which has a seat on the board of ALSCON, should have been aware of this indebtedness before offering to sell the firm to BFIG for $450 million.

BFIG, he said, would also invite the EFCC to investigate what RUSSAL had done with the $120 million credit the Federal Government extended to the Russians for the dredging of the Opobo/Imo River estuary since 2004.

He alleged that to claim the $120million credit the Federal Government promised it for the dredging of the Imo River, RUSSAL brought Autonomous Non-Profit Organisation Marine Technologies and Safety from Russia to claim the money.

The BFIG president reiterated that “the BPE’s claims that BFIG did not make the payments for ALSCON and also failed to sign the Share Purchase Agreement (SPA) are false.”

He said the group had signed the mutually agreed SPA which was prepared and delivered to it by the BPE and the group in turn hand delivered the signed SPA to the privatisation agency with five days to spare and also requested for the BPE’s bank details so that it could make the initial payments but that the BPE refused to release it’s bank details.